TCCRI Report: Improving Medicaid Efficiency and Cost-Effectiveness
During the legislative interim, TCCRI convened a Medicaid Study Group to develop recommendations on how to improve the delivery of services in the state's Medicaid program. The study group brought together health care industry stakeholders and health care policy experts to undertake a comprehensive review of Medicaid managed care programs and the Medicaid program as a whole. The final report contains dozens of recommendations on how the state can enhance Medicaid service delivery, improve the quality of care for Medicaid enrollees, and ensure the efficient use of the state's financial resources within the Medicaid program.
I. Executive Summary
At just over 28% of the entire state budget, and with a total FY 2020-2021 biennial appropriation of $66.4 billion all funds (AF), the Medicaid program is one of the single largest cost drivers for the State of Texas. And, because the program is an entitlement with open-ended funding, and is largely ruled by federal laws and regulations, the state has limited control in curbing Medicaid population growth and costs. In Fiscal Year 2019, the Texas Medicaid program served about 3.9 million low-income, elderly, and disabled individuals.
While the State has somewhat limited control of the program, this does not mean that state leaders are left with no options to improve Medicaid efficiency and contain costs. Because most Texans currently covered by Medicaid must be covered under the program in accordance with federal law, and because the state operates a mature and successful managed care program, there are no readily accessible high-impact cost savings to be easily gleaned. This, however, does not mean that improvements cannot, or should not, be made. The efficiencies to be gained now involve adjustments to existing practices that ensure quality service delivery and best value. So, while no one item in and of itself will provide a savings number that is significant relative to overall Medicaid spending or the state budget, it is important to examine these “smaller” items that can have a cumulatively important impact.
This Medicaid Study Group Report first provides background on the Texas Medicaid program and discusses the proven benefits of managed care. The “Maintaining the Infrastructure of the Managed Care Model” section of this report (Section V) discusses the importance of the concept of whole-person care coordination and why attempts to carve populations or services out of the model are regressive and should be rejected.
The “Maximizing the Managed Care Model” section (Section VI) examines ways in which the current model can be better utilized to drive efficiency, cost-effectiveness, and client outcomes. Policy recommendations in this area include examining additional services and populations that are served in a fee-for-service model but could be better served by managed care; leveraging the managed care program to drive quality and value with alternative-based payment models; increasing plan continuity among enrollees; and identifying opportunities to reduce duplicative administrative functions with the State and its contracted managed care organizations.
With respect to the “to Care Improvements” section (Section VII), this report recognizes the ongoing health care workforce shortages across much of the State, and considers how non-physician providers can be better utilized to provide quality appropriate care. Here, TCCRI recommends allowing the independent practice of advanced practice registered nurses (APRNs), aligning the personal care services (PCS) and private duty nursing (PDN) benefits, and providing the opportunity for ambulances to provide treatment in place services without the need for a costly emergency room visit when applicable.
In the “Strengthening the Medicaid Program’s Administration” section (Section VIII), the report explores how the administrative side of the Medicaid program could be modernized and made more efficient. Issues discussed here include monitoring managed care organization (MCO) deliverables to confirm that only requests for data and information that are still relevant are made; improving audit coordination between the Health and Human Services Commission (HHSC) and the Office of the Inspector General (OIG), ensuring that any audits are conducted in accordance with national auditing standards; developing a comprehensive dashboard that allows the public and HHSC to view key data points and to improve contract monitoring process; increasing transparency in the MCO rate setting process; capturing consent to communicate electronically with enrollees where appropriate, including through the use of online provider directories; maximizing the telehealth model to conduct virtual service coordination visits; and improving the Medicaid provider enrollment process.
The section entitled “Incorporating Best Practices in Managed Care Procurements” examines how “best value” criteria might be applied to managed care contracting, and the considerations that must be weighed heavily in the procurement of direct client services. Recommendations in this area include not looking to financial performance as the sole criterion for determining best value; clearly defining best value aligned with the State’s policy goals; providing transparency scoring criteria to potential vendors; incentivizing a smaller number of well-trained and compensated procurement and contract professionals; and, finally, utilizing procurement and subject matter experts within the agency, as well as leveraging outside expertise when needed.
This report includes a number of administrative and legislative recommendations to improve the program. Some recommendations are small tweaks that result in increased efficiency and transparency while other recommendations have the potential for cost savings. Although these findings and recommendations are somewhat technical, and some are relatively minor in relation to the entire Medicaid program, they are all important, as each one individually lays the foundation for a stronger, more efficient, and more cost-effective program. This foundation is critical as Texas strives to operate a Medicaid program that improves patient outcomes and bends the cost curve, while serving the needs of a large and diverse state.